Assessment of Georgia’s Economic Integration with the EU, in Light of the Association Agreement

The aim of the article is to assess the level of Georgia’s economic integration with the EU after almost 10 years of implementation of the Association Agreement (September 2014-2023). To this end, we analysed three main dimensions of the overall economic integration: trade, capital, and sectoral integration. Indeed, in many areas envisaged by the Association Agreement, Georgia’s sectoral integration with the EU has significantly increased due to the regulatory convergence and approximation of the Georgian legislation with the EU legislation. However, the analysis of relevant data shows that progress in sectoral integration has not been accompanied by a surge in trade and capital integration, which are the most important aspects of economic integration. Between the years 2014 and 2023, two indicators of trade integration – the EU’s share in Georgia’s total exports and the EU’s share in its trade turnover – decreased substantially, while the average annual growth rate of exports/imports increased slightly. In addition, during the mentioned period, based on the analysis of two indicators (the average annual growth rate of foreign direct investments, and the EU’s share in Georgia’s total foreign investment), the increase of Georgia’s capital integration with the EU is not evident. Consequently, the analysis of Georgia’s trade, capital, and sectoral integration, does not clearly show the progress of its overall economic integration with the EU during the period 2014-2023.